Wednesday, February 18, 2015

Before I head to Florida for a little sunshine, let me leave you with this ...

Okay, so I am biased. But it is a well-developed bias based
on years of experience and shattered dreams. And years of hearing the same
refrains: “I couldn’t afford a lawyer when I bought my franchise,” “I used the lawyer who drafted my will and he
said the contract was fine,” and “I heard I would be wasting my money because
the franchisor would not change the contract anyway.”

These excuses are first usually heard when I meet with a
franchise owner who is now asking for advice regarding their dissatisfaction
with their franchise relationship. Too late. That is, sometimes it is too late
to help them.

The best time to seek the help of knowledgeable franchise
counsel is before you buy a franchise. Here are the top 10 reasons why:

Franchising is complicated.

Unless you have a lot of
experience buying franchises, you don’t
know what to look for.

If you cannot afford a qualified franchise
attorney, you cannot afford the
franchise.

Lawyers who do not practice franchise law cannot effectively help you.

Qualified franchise
lawyers can educate you on the
best way to search for a franchise and how to use their services.

Qualified franchise
lawyers start with an investigation
of the franchise system and the Franchise Disclosure Document, not the
franchise agreement.

Good counsel can help you avoid selecting the wrong
franchise.

Knowledgeable franchise
lawyers have resources and connections that you don’t.

Proper negotiation of a
development or franchise agreement is a matter of timing and nuance.

The cost of a good
franchise lawyer may not be more than 1-3% of your overall investment.

There are many other reasons but you get the picture.
Lawyers who practice regularly in the franchise arena (many of whom are members
of the American Bar Association Forum on Franchising) can “read between the
lines” of a Franchise Disclosure Document, know what is missing, and are able
to detect a bad deal or even a scam.

The most effective use of a franchise lawyer may be taking a
pass on that franchise deal that could have resulted in the loss of your home,
retirement fund and savings account, not to mention that loan from your mother.

Jim Meaney is a lawyer with Zaino & Humphrey, LPA in Columbus, Ohio who has represented franchisors and franchisees for nearly 30 years. Jim is a co-author of “Starting a Franchise System: Practical Considerations, Planning and Development” and author ofHow to Buy a Franchise.

Wednesday, February 11, 2015

So, if you have inhaled enough knowledge from Part One and Part Two, it is time to start making some observations about how all this may fit into a franchise model ... or not! Keep in mind (if you can after all that inhaling and ingesting) I do not have answers, only observations. And, perhaps through some comments added to this post, others can offer theirs.

WARNING: this can get technical so put aside those brownies!

Let's start with one of the bedrocks of franchising: the Trademark. So important is this piece that the Franchise Disclosure Document devotes Item 13 to it. And, if a franchisor has not secured federal registration for its mark, a disclaimer must appear in FDD Item 13: "We do not have a federal registration for our principal trademark. Therefore, our trademark does not have as many legal benefits and rights as a federally registered trademark. If our right to use the trademark is challenged, you may have to change to an alternative trademark, which may increase your expenses."

As we learned in Part Two, however, federal trademark registration is not available for "illegal" products. And, under federal law, 21 USC Secs. 801-971 (Controlled Substances Act), marijuana is illegal; thus, a federal agency like the USPTO is not able to register a mark related to illegal products. So what to do? (what follows assumes that the mark will meet the general requirements to register any mark)

If pot is legal in a state (say Colorado), the franchise system can likely register the mark with the Secretary of State of the state where it is legal and perhaps in other states where it is legal too (although some use (of the mark, not the weed) in that state may be required)

Even though federal registration is preferred and state registration may be available, trademark rights are primarily gained through first use - so using a mark and keeping records of the use may gain "common law" rights to the mark. And "common law" rights are derived under state law;

Consider whether there is a mark that is related to the "franchise system" and not the illegal product. (This is based on some commentators' suggestions that you should seek registration for related, non-cannabis products but be careful not to use those marks in relation to cannabis-related items) Now, I am not suggesting you try this alone or without the professional assistance of a trademark lawyer. Assuming that the goal is to secure a federal registration of the mark by attempting this, you will likely have an uphill battle at the USPTO and need a good lawyer.

Any other suggestions out there?

Jim Meaney is a lawyer with Zaino & Humphrey, LPA in Columbus, Ohio who has represented franchisors and franchisees for nearly 30 years. Jim is a co-author of “Starting a Franchise System: Practical Considerations, Planning and Development” and author ofHow to Buy a Franchise.

Wednesday, February 4, 2015

Left you hanging in Part One of Franchising Marijuana ... because I hear that when ingesting cannabis it is best to take small bites! A few legal bites here ...

I left off observing that "The legal issues surrounding the marijuana industry are hyper-complex and challenging for all concerned ... even for franchise attorneys." And, when we overlay legal and business issues particular to franchising on any marijuana-related business, the complexity-calculus grows.

First, in this post, the general areas of concern confronting pot-trepreneurs (making no distinction between medical and recreational cannabis) and potential franchise systems:

While the federal government is "laying-off" prosecutions in most states that have legalized the wicked weed and state bar associations are revising ethical rules to give attorneys some representational-leeway, uncertainty remains. More can be said here ... but this is a blog ... and we are taking small bites.

Part Three will take a few more bites.

But if you want to read more now, I recommend an article written by my franchise-lawyer colleague, Elliot Ginsburg, Medical Marijuana Franchising: A Half-baked or Fully Baked Plan?, that appeared in the American Bar Association's Forum on Franchising's The Franchise Lawyer (Summer 2012).

Jim Meaney is a lawyer with Zaino & Humphrey, LPA in Columbus, Ohio who has represented franchisors and franchisees for nearly 30 years. Jim is a co-author of “Starting a Franchise System: Practical Considerations, Planning and Development” and author ofHow to Buy a Franchise. Visit www.fddlawyer.com or www.ohiofranchiselawyer.com for more information or contact Jim directly at 614.975.9876 or jmeaney@zandhlpa.com

About Me

Jim Meaney is a lawyer and partner with the Zaino Law Group in Columbus, Ohio, who has represented franchisors and franchisees for 30 years. Jim is a co-author of “Starting a Franchise System: Practical Considerations, Planning and Development” and author of How to Buy a Franchise. Contact Jim directly at 614.975.9876 or jmeaney@zainolawgroup.com.